American Apparel Inc. on Monday unveiled plans to cut costs by
closing underperforming stores and streamlining its workforce as
the retailer looks to turn around its flagging business.
American Apparel said the moves, which are expected to save $30
million over the next 1 1/2 years, are aimed at helping the company
adapt to headwinds in the retail industry and preserving jobs for
the "overwhelming majority" of its 10,000 employees.
The Los Angeles-based retailer noted that even if it succeeds in
growing revenue and cutting costs, there is no guarantee that it
will have sufficient financing to meet its funding requirements for
the next year without raising additional capital.
American Apparel's stock has fallen dramatically since peaking
at nearly $17 a share in late 2007. Shares, inactive premarket,
closed at 50 cents on Thursday, down about 52% this year.
American Apparel also said Monday that it would launch a new
fall merchandise line—a first for the company.
"Historically, the fall season has not been a major focus for
the company," said Chief Executive Paula Schneider, who was
appointed to the role in January. "The new styles are designed to
increase revenue as we continue to evolve our product offering
during this important selling season."
The moves come as American Apparel's sales have been on a steady
decline and it continues its tussle with the company's former chief
executive, Dov Charney.
Mr. Charney, who was terminated in December following
allegations of misconduct and of violating company policy, has
filed a string of lawsuits against his former employer.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
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